C2ES Comments on Proposed EPA Rule for New Power Plants

Summary of C2ES May 2014 comments on EPA’s proposed “Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Generating Units.”

On September 20, 2013, EPA proposed carbon dioxide emission standards for new power plants in implementing its authority under section of 111(b) of the Clean Air Act. More information on the proposed rule can be found here[2]. On May 7, 2014 C2ES submitted formal comments to EPA in response to the proposed rule. You can read those comments here[1], which are summarized below.

Market-based measures preferred: A comprehensive market-based approach would be a more efficient and effective way of reducing greenhouse gas emissions. This would require congressional action, which is unlikely in the near term. In the absence of legislation, C2ES believes EPA must proceed using its existing authorities under the Clean Air Act.

Comprehensive energy strategy needed: The United States needs a comprehensive energy strategy that advances low-emitting uses of coal and natural gas, nuclear power, renewable energy, and efficiency. Carbon capture and storage (CCS) must be an element in this strategy.

Importance of a CCS requirement: EPA’s proposed rule would essentially require any new coal plant to employ CCS technology to capture approximately 40 percent (at minimum) of its carbon dioxide (CO2) emissions and store this captured CO2 underground. Due to the availability of inexpensive natural gas and other market factors, no new coal plants are projected in the near term. However, significant increases in natural gas prices may renew interest in new coal plants. If this occurs, a CCS requirement as proposed by EPA will ensure that these new coal plants do not exacerbate the challenge of reducing greenhouse gas emissions.

CCS experience: There are about 50 commercial-scale CCS projects in the power and industrial sectors in various stages of development across the globe, including 12 already in operation in a variety of industrial plants in the United States. All of these plants transfer the captured CO2 to enhanced oil recovery projects (CO2-EOR). CO2-EOR has been used in the United States for 40 years to coax additional production from existing oil wells while reliably storing CO2. Since this process attaches a value to captured CO2, it has been and will continue to be critical in the deployment of CCS in the power sector.

A CCS requirement is only part of the solution: There are several barriers to the deployment of CCS on new coal plants. For one, even if there were an economic reason for a power company to build a new coal plant, there would be no economic or regulatory reason to include CCS. Additionally, CCS technology is currently very expensive, especially compared to a new natural gas power plant. The proposed rule addresses the former problem, but not the latter. Federal financial support through tax credits, such as the Expanding Carbon Capture through Enhanced Oil Recovery Act of 2014, and/or grants is also critical to help technology companies and power providers gain experience and reduce the costs of CCS.

Flexibility mechanisms: In addition to a regulatory requirement and financial support, power companies need time to bring CCS to the point of being cost competitive with other low- and no-carbon power generating technologies. We therefore encourage EPA to consider provisions to allow for flexibility in compliance with the CCS requirement, such as a 20-year emissions averaging period or a few years of lead time before capture is required on plants built after the rule goes in place.

Natural gas standard: Since there are circumstances whereby it is necessary to run gas plants at less than peak efficiency to minimize the systematic emissions of the power system – for example, to back up intermittent renewable sources of electricity – we encourage EPA to ensure that the proposed standards for natural gas plants are achievable for new combined cycle plants under all likely operating conditions.

Relationship with standard for existing plants: The relationship between EPA’s greenhouse gas standard for new power plants and the standard for existing plants is currently unclear. We request that EPA provide guidance on this point to reduce uncertainty for power companies and state regulators.